Following the recent sharp decline in the price of Bitcoin from approximately $115,000 to $104,000, participants in the cryptocurrency market have intensified measures to protect their capital. Experts from Glassnode reported that the market has entered a state of heightened caution, as confirmed by both technical and on-chain metrics.
This is reported by Finway
Technical Indicators Indicate Rising Tension
Analysts estimate that the Bitcoin drop over four days was a “swift and decisive market cleansing,” leading to the exit of weaker players and a shift in strategy for many traders. Despite a temporary recovery in Bitcoin’s value, market sentiment remains cautious, reflected in the current positioning of participants.
Glassnode provided a detailed analysis of key metrics:
- The RSI index has fallen below a key level and, after a partial recovery, remains in a zone of weakness.
- The cumulative volume delta remains negative, indicating seller dominance.
- Spot trading volumes decreased during the drop, suggesting weak demand.
- Open interest in futures has declined, and funding has turned negative.
- The options market is seeing an increase in the 25 Delta Skew, which is a sign of heightened demand for protective strategies.
Long-Term Investors and Recovery Prospects
The combination of these factors, according to experts, indicates that the market has shifted its focus from profit-seeking to capital preservation. Analysts also noted that key indicators, such as the unrealized profit and loss ratio (NUPL), have turned negative, and the realized profit/loss (Realized PnL) has fallen below the previous low. These signals confirm the presence of stress in the market.
At the same time, realized capitalization (Realized Cap) continues to rise, which may indicate accumulation of Bitcoin by investors focused on the long-term outlook.
“The market excess has been cleared, protective positions have been established, and the positioning structure has become cleaner. The bounce from the lows is a hopeful signal; however, the market structure remains fragile. Until confidence is restored, the market is likely to remain more cautious than convinced,” concluded Glassnode.
Previously, analysts from CryptoQuant reported that Bitcoin has entered the late stage of a bullish cycle.